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Class A and class B are two different classes of stocks, known as classified stocks, which are issued publicly. Although most companies issue only one type of stock to public (known a common stock) having same voting and dividend rights, some companies issue more than one type of stock (class A, B, C...) to achieve some specific goals. The goals can be

1. For retaining of company control by the founders
2. To offer fixed (higher) dividend to some shareholders, or
3. To offer shares for higher/lower prices than existing

For example, class A stocks of a company may have a voting right ‘one vote per share’ and class B stocks may have a voting right ‘ten vote per share’. In this case, class A stocks should be widely traded in public and class B should be owned by some specific individuals who controls the company.

The practice of issuing different classes of stocks started in 1996, when Berkshire Hathaway of which 40% shares are owned by Warren Buffett at that time issued a new class B stock to public having one-thirtieth price and voting right of their existing class A stocks. Class A stock (ticker symbol: BRKa or BRK.A) holders can exchange their stocks for 30 class B stocks (ticker symbol: BRKb or BRK.B), but no exchange in opposite direction was allowed.

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The Week Ahead: The appointment of Timothy Geithner as the new Treasury Secretary in 2009 helped to lift the market sharply on Friday after a breakdown in the major indexes earlier in the week. The S&P 500 reached levels not seen since 1997. Existing home sales are due out on Monday. The preliminary GDP numbers for Q3 are released Tuesday along with consumer confidence and the Case Shiller Home Price Index. Wednesday brings the durable goods report and personal income & spending. The market is closed Thursday for Thanksgiving with a shortened trading session on Friday.

Stocks to Watch: Celanese (CE) warned that the 4th quarter and 2008 profits will miss analysts estimates. The stock dropped 41% to new all time lows. Anglogold (AU) secured a $1 billion bridge loan to refinance expiring convertible bonds and helped rocket the stock 43%. Other gold stocks rose sharply as well including Kinross Gold (KGC) which broke through its 50 day moving average. Alpha Natural Resources (ANR) received an upgrade from a major brokerage which helped lift the stock from a deep low.

Special Note: Yet another bailout is in store this time for Citigroup, one of the largest money center banks in the country. The Treasury will inject $20 billion from the congressionally approved TARP funds and receive an 8% preferred stock. In addition a $306 billion backstop will be provided against a pool of Citi's troubled assets. The deleveraging process of all assets classes will likely continue despite this news making it tough for the market to make any headway. There are still no technical signs of a bottom in place.


Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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World forex market has its own language. There are nicknames to currencies and currency pairs and there are some interesting terminologies. Knowing them is important is for a forex trader as it will help him in better understanding of news, reports and commentaries. Here are some of them with some interesting explanations.

Nicknames of Currencies

• US Dollar (USD) – Greenback and buck. The name buck came from “buckskins” which were used for trading in late 1700s, when there was no paper money.
• British Pound (GBP) – Cable, Pound and Sterling. The name cable probably came from the trans-Atlantic cable between US and Britain.
• Canadian Dollar (CAD) – Loonie and Little dollar. Loonie is the bird depicted on the Canadian coin.
• Euro (EUR) – Fiber.
• Australian Dollar (AUD) – Aussie or Ozzie. Aussie is the word now-a-days used to denote anything having an origin in Australia.
• Swiss Franc (CHF) – Swissie.
• New Zealand Dollar (NZD) – Kiwi, named after the non-flying bird found there.

Currency Pair Nicknames

• EUR/JPY – Euppy or Yuppy.
• EUR/GBP – Chunnel, as a tunnel connect Britain and France (the European continent).
• GBP/JPY – Gopher.
• USD/JPY – Ninja.

Terminologies

• Yard – is a billion unit of a currency.
• Figure – is a term denoting a round term. Eg: 1.2000 and 2.400

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Moving average is one of the most widely used indicators for trading all types of financial instruments, especially forex currencies. It is simple and is easy to interpret and can be used in any style of trading. But there are many factors which are to be considered when you using moving average for trading instruments.

1. Market data used: most often closing price of a day is used for moving average calculation, but you can also use daily highs or lows, opening prices or medians to calculate moving averages.
2. Time periods used: 30 day and 50 day moving averages help position traders and investors to finding enter and exit points, and also stop losses. But day traders and similar active traders should use intraday (1 hour, 30 minutes, etc) moving averages.
3. Market trends: Most trading strategies based on moving averages work well when market is on a move (either upward or downward). They are less effective in sidewise moving markets. Also in a sidewise market trading systems often generate too much wrong signals.
4. Your Trading Objective: Are you an aggressive trader having high risk tolerance? Or you are a conservative trader looking for preserve your capital? You should find buy and sell signals and stop-loss points based on your objective.
5. High volatility: Traders using short-term moving averages to enter a trade before a large move often get wrong signals when prices are rapidly going up and down.
6. Lagging indicator: moving average respond to current and past trends and can not be used widely to predict trends. Many times a trader following moving average enter a trade when the opportunity diminishes.

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Certificated stocks or certified stocks or deliverable stocks are (stored) stocks of commodities (do not misunderstand with stocks of companies) which are certified to meet the basis grade set by exchanges. The commodities are tested for both quality and quantity at a designated location and are used as delivery against futures contracts.

Certification of commodity is done by an authorized representative of futures trading exchange; after that only the product is considered as acceptable for delivery. The process is widely used for agricultural and food products especially grains, where certified stock is known as ‘stocks in deliverable position’.

In futures trading, there are many advantages of this certification process.

• The quality and quantity of underlying commodity is assured.
• Sellers get a clear idea about what they are selling and buyers will be clear about what they are buying.
• Trading of commodities which do not meet the requirements is reduced.
• Helps in developing a warm relationship among the producer, the market and the buyer; and assures smooth functioning of market.
• Create competition among producers to produce more quality products; today there are many producers who easily exceed the standards set by different markets.

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As the name suggest tri-star pattern is a rare candlestick pattern, which is composed of three consecutive doji candlesticks. The pattern indicates market reversal when they are formed after a prolonged trend. There are both bullish and bearish doji tri-star candlestick patterns.

Bullish Doji Tri-Star: Indicate the end of a downtrend and beginning of uptrend. The requirements of this pattern include

• It should be formed after a significant downtrend.
• There should be three consecutive doji candlesticks.
• The second doji candlestick should be gapped below to other two candlesticks (not necessary in forex trading).

Bearish Doji Tri-Star: Indicate the end of a uptrend and beginning of downtrend. The requirements include,

• It should be formed after a significant uptrend.
• There should be three consecutive doji candlesticks.
• The middle doji candlestick should be gapped above to other two candlesticks (except in forex charts).

Both bullish and bearish doji tri-star patterns indicate high indecision in the market leading to the reversal of current trend. Usually the trading volume associated with this pattern is low. Tri-star pattern is a moderately reliable pattern and confirmation of trend reversal is strongly suggested, which can be a bullish (for bullish tri-star) or bearish (for bearish tri-star) candlestick on fourth day with increased trading volume. The reliability increases with increase in trading volume and the increase in gapping of second day candlestick against previous day close. The pattern is less reliable for stocks/currency pairs with reduced trading volume.

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Bellwether or Barometer stocks are stocks which are considered as the indicators of overall market or market sector. These are stocks of big companies which are the leaders of particular industries, and ups and downs of which produce corresponding changes on that and related industries. Some very good examples of bellwether stocks include General Motors – automobile industry, Microsoft – software sector, Wal-Mart – retail sector, etc.

Bellwether is a term which denotes the sheep with a bell which leads rest of the flock. Finding and keeping track with bellwethers is vital from an investment point of view as most other stocks of the industry tend to follow them; whenever bellwether go upward, others too go up and vice versa. Most of the barometer stocks are blue-chip stocks with high market capitalization and investing in them offer high-return and low-risk; and is a major tactics followed by growth investors and CANSLIM investors.

Bellwether stocks also produce a profound effect of a nation’s economy. For example any news which related to General Motors not only influence automobile industry but also steel and other metal industries, financial sector, oil and energy industries, retail industry and so on; there for the saying “What good for GM, is good for America”. There can be more than one barometer stock available for one industry/sector; and also it is not necessary that trends of all other stocks of the industry follow that of the barometer stock of its industry.

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The Week Ahead: With unemployment numbers up ten consecutive months, momentum appears to be gaining as August and September figures were revised upward. Markets will key in on President Elect Barrack Obama's choices for economic positions in his administration. Bond markets are closed Tuesday for Veterans Day. Watch for further increases in the jobless claims numbers on Thursday as well as the trade balance. An important retail sales report for October is due Friday along with business inventories.

Stocks to Watch: Fluor Corp. (FLR) surprised traders by nearly doubling earnings for Q3 and beating estimates. The stock could be near resistance. The CEO of Autonation, Inc. (AN) is showing confidence in his business making more space for foreign vehicles, cutting debt, and meeting loan covenants. OSI Pharmaceuticals (OSI) had a late stage trial of Tarceva improve the survival rate in lung cancer patients as the stock gapped up from a recent low. Delta Petroleum (DPTR) declined significantly after Tracinda Corp. withdrew its tender offer.

Special Note: Dividend yields on many blue chip stocks have recently become more attractive relative to the recent past. The Dow Industrials and S&P 500 were down as much as 45% from their 2007 highs and reached a 3.7% dividend yield. This appears to be a good yield, but historically this level was considered low during most of the 1900's and near market tops. Since 1995 though yields reached the low 1% area indicating an extreme overvaluation in stocks. The average bear market bottom on the DJIA historically yields 6.5%.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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NobleTrading Direct Access Trading

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If the difference between forward exchange rate and spot exchange rate of one currency is a positive value, it is known as forward premium and if it is a negative value it is known as forward discount. In other words if the spot ‘futures exchange rate’ is higher than the spot exchange rate then it is known as forward premium and if it is lower than spot exchange rate then it is known as forward discount.

Forward exchange rate of domestic currency (DC) with regard to a foreign currency (FC) for one year is derived by the formula,

Forward Rate = Spot Rate of FC x

(1 + Interest Rate of FC) (1+ Interest Rate of DC)

If the sport rate of Canadian dollar (CAD) is 0.7870, one year interest rate of Canada is 3.5% and that of US is 3% then the forward rate of USD with regard to CAD will be,
1 USD = 0.7870 x (1 + 3.5) / (1 + 3) = 0.8853
Which is 0.0983 (98.3 swap points) higher than the current spot price of CAD, thus USD trades at a forward premium against CAD and CAD trades at a forward discount against USD.

If the exchange rate after one year is still at or around 0.7870 in the above example, a trader can benefit from the arbitrate opportunity of converting low interest rate currency to high interest rate currency and depositing it for one year, and simultaneously buying an one year forward contract for low interest rate currency to hedge risk.

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Exchange traded funds (ETFs) are considered among most liquid trading instruments, especially when compared against mutual funds. But different ETFs have different levels of liquidity. Below are some factors that affect the liquidity of these funds.

1. Underlying Asset: ETFs which have less liquid equities as there underlying assets are usually less liquid than those have liquid equities as underlying asset.
2. Diversification: ETFs which invest in broad diversified market indexes are usually more liquid than which invest in specific sectors.
3. Market Capitalization: ETFs which invest in large-cap stocks are usually more liquid than mid-cap and small-cap tracking ETFs.
4. Fixed Income Securities: ETFs which have fixed income securities like treasury bonds, corporate bonds, etc as underlying instruments are more volatile and is also less risky.
5. Economy: ETFs which track indexes of emerging world economies are usually considered less liquid than that of developed world economies. Also ETFs investing in domestic securities are more liquid than foreign ones.
6. Trade Volume: Although not a major factor, increase in trading volume of ETF positively contributes to the liquidity of it.
7. Trading volume of underlying stocks: The more the underlying stocks are traded the higher the liquidity of ETF.
8. Time, News and Market Forces: These ever changing factors affect the liquidity of all the traded instruments including ETFs.

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Bearish evening Doji star pattern is one of the most reliable Japanese candlestick patterns which indicate a possible trend reversal. This candlestick pattern includes three candlesticks; often formed at the top of an uptrend and indicate a possible downtrend. Evening Doji star pattern is widely followed by all types of traders trading all types of financial instruments.

The requirements of a bearish evening doji star pattern include,

• It should be formed after a significant uptrend.
• First day is should be bullish characterized by a long white (colorless/bullish) candlestick.
• Second day is the day of uncertainty which result in formation of a doji star (where opening and closing prices are almost equal).
• Third day should be bearish characterized by a black (colored/bearish) candlestick, ideally which closes below the mid-point of first day candlestick.

Bearish evening doji star formation occurs when instruments are at their overbought positions. Bulls dominate the first day; on second day the market opens at a gap but the increasing uncertainty lowers the confidence of bulls; on third day bears start to dominate.

With evening doji star pattern, there is always chance of formation of more than one doji star candlestick. Even though it is a highly reliable pattern, confirmation is still suggested which can be a bearish candlestick or gap on fourth day. The gapping of doji candlestick is not a necessary requirement, especially for forex traders as the market is continuous.

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Related Trade Orders, sometimes known as Contingent Trade Orders, are complex trading orders which are created by combining two or more orders. They comes handy when trader want to execute or not to execute the orders (the second or third order) when a specific condition is met. There are mainly three types of related trade orders.

1. IF DONE Orders: Also known as slave orders. These are orders in which the second order or slave becomes only active when the first order is executed. Eg: first order to buy a stock on reaching a price level and the slave order to sell it on reaching another price level.
2. OCO (One Cancels Other) Orders: These are related trade orders in which execution of one order automatically cancels the other. Usually an OCO order contains both stop loss and limit order, only one of which is executed.
3. 3-Way Related Orders: This is the combination of IF DONE and OCO orders. The first order is a slave order, execution of which automatically triggers the execution of second order, which is an OCO order.

Related trade orders save trading time and allow traders to practice complex trading strategies; and are also helpful when the trader is not sure about market direction. Not all brokers allow related trade orders and the fees involved are usually higher than other orders.

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The Week Ahead: A continuation of the see-saw action in stock prices is likely as November trading begins. One positive for consumers despite record low sentiment numbers is the rapid decline in oil prices and therefore gasoline at the pump. All eyes are on Election Day this Tuesday. Any surprises will only help to create more up and down volatility. Factory orders will also be out on Tuesday. On Thursday chain store sales will hint at any consumer vitality. Finally, by Friday, another potentially problematic employment report is released.

Stocks to Watch: Wynn Resorts Ltd. (WYNN) beat earnings estimates for Q3 even though they were lower than a year ago, but the stock has already more than doubled its recent low from just 5 days ago. Carnival Corp. (CCL) cut its 2009 dividend in order to build up cash reserves so that it would not have to tap the weak capital markets. Jm Smucker (SJM) will close on the spin-off of Folgers from Procter and Gamble on Wednesday after which its stock will be added to the S&P 500 Index.

Special Note: As this weeks Presidential Election unfolds, a triangle or flag pattern appears to be developing on the Dow Industrials and S&P 500 Index. The entire trading range since the October 10 low and October 14 high has been between these two price points. With each successive lower high and higher low the market makes from here the triangle will reach its pinnacle point. The direction from there is usually the final move of the trend that preceded it which in this case is down to new lows. A move above 9795 on the DOW or 1045 on the S&P 500 would negate this pattern.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

Click here to open an account.
NobleTrading Direct Access Trading

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web: http://www.nobletrading.com

Like Non-Deliverable Forward (NDF), Non-Deliverable Swap (NDS) is cash settled contracts which do not involve delivery of underlying instrument. The only difference is that the cash settlement is done through a major (fully convertible) currency like U.S. Dollar. Similar to NDF, NDS also involves two currencies, usually one major currency and one restricted currency.

Non-deliverable swaps allow emerging market companies operating with minor currencies to hedge against currency risks. In NDS, the interest rate of the restricted currency is fixed at that of the other is kept fixed or floating. Interest rate payments are done on quarterly, semi-annual or annual basis and principal amount is paid on maturity of the contract. Any payments which include the restricted currency are done through major currency based on prevailing sport exchange rate.

For example, two companies enter into a non-deliverable currency swap for $1 million, which involve exchange of USD and a restricted currency (eg: South Korean Won, KRW). If after 3 months the one company has to pay KRW worth 1,000,000 to the other company, and the prevailing spot exchange rate is 1300 KRW for $1, then the company pays $769.23 (1,000,000/1,300).

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